China's currency weakened against the greenback and neared the lower limit of a key daily trading band.
- The onshore yuan weakened 0.58% against the dollar Friday to 7.1193, Bloomberg data shows.
- China's currency neared the lower limit of its daily trading band, while the dollar climbed thanks to a hawkish Fed.
- The yuan was 1.8% below Beijing's reference rate, which allows a 2% move in either direction.
China's onshore yuan tumbled 0.5934% against the dollar to 7.1201 on Friday and neared the lower limit of its daily trading range, Bloomberg data shows.
The yuan joined other top global currencies lower as the dollar continued to strengthen amid the Federal Reserve's hawkish rate-hike campaign.
The daily fixing set by the People's Bank of China allows for a 2% fluctuation in either direction, and the yuan was 1.8% below Friday's fixing. A move beyond 1.91%, per Bloomberg, would mark the largest swing since August 2015.
The yuan has been in an extended slump even as China's central bank has made stronger-than-expected fixings in every single session for nearly a month.
Earlier in September, the offshore yuan dipped below the psychological threshold of 7 per dollar, which marked its weakest level since July 2020.
Meanwhile, the dollar continues to look unstoppable against rival currencies, as the Fed's aggressive tightening has made the greenback a more attractive haven for investors.
The US Dollar Index has climbed more than 16% in 2022 to hit the highest level in 20 years. And with Fed Chair Jerome Powell signaling this week that more rate hikes loom, more strengthening could follow.
China may come under pressure to do more to support the yuan, while other nations have already intervened in currency markets. Japan moved Thursday to defend the yen's value by dumping dollars, and India has been rapidly drawing down its currency reserves to bolster the rupee.